Disney-Fox Deal Means Far More Than Just 'X-Men' Joining Marvel

Scott Mendelson
, ContributorI cover the film industry.Opinions expressed by Forbes Contributors are their own.

Walt Disney

'The Avengers' image courtesy of Disney

Updated on December 14, 2017 at 8:15 am, now that the deal has indeed become a reality.

If your main concern with the Disney acquisition of Fox is how Fox’s Marvel superhero properties will make their way into Disney’s MCU, you're not focusing on the big picture. That’s just the tip of the iceberg in terms of the broader implications, and the ability for Wolverine to show up in Avengers 4 may come at far too high a price.

First and foremost,
Walt Disney is currently running up 18% of the total domestic box office as
Fox now makes up 12% of the 2017 North American theatrical market. While Disney is now behind Warner Bros./Time Warner Inc. in domestic market share, it’s close enough that The Last Jedi should put it over the top. Very rough math, but just $650 million domestic for Star Wars plus leftover money for Coco and Thor: Ragnarok should push Disney over $2.5 billion for the year as WB hopes to get to $2.1b.

Last year, Walt Disney had a jaw-dropping 26% of the domestic box office while Fox had 13%. With Fox and Disney combined into one entity, it’s plausible to see Walt Disney’s theatrical output controlling close to 40% of the theatrical business. With that kind of hold, the Mouse House could essentially rewrite the rules for how its movies are seen in theaters (higher ticket prices, higher percentages back to the studios, exclusive auditorium control, etc.) in a way that wouldn’t remotely help the likes of Universal or Warner Bros.

Disney has already gotten heat this year for somewhat more draconian terms for domestic theaters planning to show Star Wars: The Last Jedi (because it knows that much of the money isn’t going to come from the overseas business). It justifiably got torn to shreds for blacklisting Los Angeles Times journalists from Thor: Ragnarok press screenings after the paper reported unfavorably on Disneyland’s tax-related relationship with Anaheim. While Disney relented quickly, arguably because Coco needed the critical buzz more than Thor, such a move could well be solidified with that much control of the market.

And while Walt Disney is a publicly traded company and not a charity, this wouldn’t necessarily be good for the overall industry. Fewer major studios mean fewer places for artists to pitch their work, and thus potentially a less diverse slate of movies and television shows. Less competition could also drive down compensation for said artists, and Disney would be powerful enough to (if it chose to) essentially set the status quo for compensation for the next round of union negotiations. But at least we’d get a decent Fantastic Four movie, right, guys?

Disney would own the X-Men characters, the Fantastic Four franchise and a host of other huge franchises like Avatar, Alien, The X-Files and The Simpsons. I guess Avatar 2 (or, less likely, Deadpool 2) wouldn’t be the first $1 billion+ grosser outside Disney or Universal since Transformers: Age of Extinction back in 2014. Since Disney already owns ABC, I don't think it'd be allowed to own the Fox broadcast network as well, although it could get the cable channels (like FX) and enough of a stake in Hulu to make it Netflix’s primary rival whether Hulu becomes Disney’s de facto streaming service or not. So it could well be Disney vs. Netflix vs. Amazon vs. everyone else.

Even if X-Men does join the MCU, Fox has just found its footing in terms of differentiating X-Men from the MCU or DC Films by going all-in with genre appropriation and offbeat comic book cinema. Will we lose R-rated fare like Logan and Deadpool or genre-specific offshoots like The New Mutants? Marvel has thrived partially because it didn’t have access to the most popular characters and had to make its B-characters into A-level movie stars. Assuming Marvel even wants those new franchises, what will the MCU look like if it can churn out X-Men, Fantastic Four and occasional Sony-produced Spider-Man films?

Disney won’t own Fox News or Fox Sports, but what do you think the owners of Fox News are going to do with lots more money on hand and an explicit devotion to news and media? It’s not Disney’s responsibility to make sure that its money doesn’t go toward evil, but the powers behind Fox News having more money and more free time to devote to media and politics is not going to be good for media and politics. At least Captain America can punch Dr. Doom. Now it isn’t all doom and gloom, but silver linings require a certain degree of idealistic optimism.

I’d like to think that Disney wants Fox not to crush a major competitor but rather to use Fox’s bench in terms of making adult-skewing fare a major asset for Disney. I’d like to think that Disney would continue to let Fox do what it wants (as it has given Marvel and Lucasfilm comparative creative freedom) and allow Fox and Fox Searchlight to allow Disney to also corner the market on adult-skewing prestige fare, Oscar-season biggies and grown-up blockbusters like War for the Planet of the Apes or Murder on the Orient Express. But that’s no guarantee.

And if Disney views the Fox/Fox Searchlight fare as glorified prestige releases, less about drowning in profits than cornering the market, then those films would be less beholden to the whims of theatrical moviegoing. They would dominate the blockbuster realm with the likes of Star Wars and Beauty and the Beast, while also offering (presumably under Fox’s banner or the likes of Touchstone) adult-skewing biggies like The Revenant as well. But that’s assuming Disney has any interest in the likes of Kingsman: The Secret Service, Gone Girl or 12 Years A Slave, although some of those titles being namechecked in the press release gives me a token amount of optimism.

Again, that’s not inherently good for competition, as it would essentially turn Hollywood into “Disney/Fox versus everyone else” with Warner Bros./Time Warner Inc. and Universal/Comcast Corp. as the only ones who could stand up to the Mouse House. Assuming Disney doesn’t decrease the Fox output, those three studios alone could control 55-70% of the domestic market share in any given year. Yes, Lionsgate and the smaller distributors (A24, Open Road, STX, etc.) could still do their thing, but Sony and Paramount/Viacom Inc. would be in trouble.

It might be good news for those of us who still champion the theatrical experience. Disney has thus far been the major holdout in would-be attempts to jump-start early VOD. If that one company now controlled 35-40% of the marketplace, it could be a boon for theaters, assuming Disney doesn’t use its overall dominance to extract concessions and/or extra money from theaters in a way that hurts its rivals and/or the theater chains. Again, I’m not saying it would, and I hope that it wouldn’t, but it isn't required to have the same values as the characters in its movies.

Maybe the deal won’t survive government scrutiny or maybe something will spike the punch over the next year, although Fox apparently wants to unload its film/TV divisions, so someone is probably going to snatch it up (at least Universal and Fox would together control only 25% of the market). It is … disconcerting to see how much of the talk concerning this merger has been focused entirely on the notion of Deadpool hanging out with Thor. This is a game-changing shift in the entertainment industry, one that cements Walt Disney as an ultimate power in the world of TV and film while potentially allowing Fox News to become even more of a dominant player in media.

There are potential upsides but far more potential trouble spots to this deal. I am not so naïve as to not understand the disconnect between the idealistic product that Walt Disney puts out and the cold, calculating business decisions made by folks who may be inclined to act closer to Scar than Steve Rogers. But the cost of bringing Avatar and the X-Men into the Disney fold may well be the creation of a true multimedia empire. And even the potential for monopoly-esque tactics or inadvertently giving Fox News buckets of money for its media pursuits may cost Disney any appearance of moral righteousness.

As someone who likes the products and values that Disney presents to the world, I do wish this hadn't come to pass.

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